LANDFILL TAX (LFT)
What is it?
Originally introduced on the 1st October 1996, Landfill Tax (LFT) is a tax on the disposal of waste to landfill.
LFT now applies to the disposal of any material where the disposal site has, or is required to have a permit, or a relevant waste management licence.
Operators of landfill sites have the obligation to register for LFT.
There are two rates of LFT applicable to each tonne of material deposited at a registered site. The difference between these rates is substantial, from 1 April 2022, the standard rate is £98.60 per tonne, and the lower rate is £3.15 per tonne.
The lower rate of LFT applies to inert materials only, where those materials are specified in the legislation. The standard rate applies to all other materials unless it qualifies for exemption or it is destined for a specific use in a landfill site.
Establishing the rate of tax
Where sites have weighbridges, these are most suitable for determining the weight of taxable material, but other calculation methods can be used where this is not possible. If water has been added to the material, it is possible to discount this water content from the taxable weight.
Where mixed loads are received at authorised landfill sites, the standard rate applies to the whole load. But where the standard rated material makes up only a small amount of the load, HMRC can direct that the whole disposal attracts the lower rate of LFT.
Landfill site operators must maintain adequate evidence to support and substantiate the rate of LFT it has applied. This includes mandatory documentation such as ‘waste transfer notes’ and any testing that has been undertaken to determine the nature of incoming material.
Critical and contentious points
Some material is deemed to be taxable even when it is put to use on a landfill site. For instance, material used to construct temporary site roads is taxable, whereas using the same material to construct a landfill cap is not.
The lower rate, tax reliefs and relaxations are not generally available in the case of unauthorised sites.
The devolution of this tax to different administrations means that some aspects of it vary according to where the disposal site is located, including some tax rates and penalties.